1998 (5) TMI 157 - AT - Central Excise

Summary

Issues:
1. Refund claim under Rule 173L of Central Excise Rules, 1944 for returned and remanufactured goods.
2. Objection of non-correlation between returned and remade goods.
3. Refund claim being barred by limitation under Section 11B of the Central Excise Act.

Analysis:
1. The appeal challenged the Order-in-Appeal upholding the Order-in-Original regarding a refund claim for goods returned and remanufactured by M/s. Asea Brown Boveri Ltd. The Asstt. Commissioner objected to the lack of correlation between the returned and remade goods. The Commissioner (Appeals) upheld this decision and additionally cited the refund claim as being time-barred. The appellant contended that Rule 173L does not require identical packaging for returned goods and emphasized timely remanufacturing and dispatch.

2. The Commissioner (Appeals) raised a new ground of the refund claim being time-barred, not mentioned in the show cause notice or original order. The appellant cited legal precedents like Samtel India Ltd. and Taylor Instruments Company to support their argument against the time limitation, emphasizing the statutory provisions under Section 11B for refund claims related to returned goods.

3. The Respondent argued that discrepancies in the description and numbers of the returned and remade goods led to the adverse decision. They contended that Rule 173L applies only to goods returned due to manufacturing defects, not for other reasons like financial issues faced by customers. The Respondent highlighted that the scope of Rule 173L is limited to goods returned for manufacturing defects necessitating remaking or remanufacturing.

4. The Tribunal rejected the argument that Rule 173L applies only to goods returned due to manufacturing defects, citing the Taylor Instruments Company case where goods were returned due to customer issues, not defects. The Tribunal emphasized that the rule does not exclude remanufacture and that the identification of originally dispatched goods at the time of return is crucial for reconditioning or remaking, even if the goods undergo significant changes during the process.

5. Regarding the time bar issue, the Tribunal noted that the Commissioner (Appeals) introduced a new ground not present in the original proceedings. The Tribunal held that the relevant date for the refund claim should be the date of entry of returned goods into the factory for remaking or similar processes, not the date of duty payment. The Tribunal overturned the time bar objection and allowed the appeal, restricting the refund amount to the duty paid for the second consignment.

6. In conclusion, the Tribunal set aside the impugned order, allowing the appeal with the condition that the refund amount aligns with the duty paid for the second consignment. The Tribunal clarified that unjust enrichment did not apply as the duty was not received from the customer who returned the goods. The appellant was instructed to demonstrate to the Assistant Commissioner that no excess duty burden was passed on to the second customer.